Data for adjustments at December 31, 2015, are listed below and the unadjusted trial balance at the top of the following page.

(a) Taipei International uses a perpetual inventory system.

(b) An analysis of Accounts Receivable reveals that the appropriate year-end balance in Allowance for Bad Debts is $750.

(c) Equipment depreciation for the year totaled $32,000.

(d) A recheck of the inventory count revealed that goods costing $5,600 were wrongly excluded from ending inventory. The goods in question were not shipped until January 3, 2016. A related receivable for $8,200 was also mistakenly recorded.

(e) Interest on the note payable has not been accrued. The note was issued on March 1, 2015, and the interest rate is 12%.

(f) The balance in Insurance Expense represents $3,000 that was paid for a one-year policy on October 1. The policy went into effect on October 1.

(g) Dividends totaling $7,800 were declared on December 25. The dividends will not be paid until January 15, 2016. No entry was made.

Instructions:

1. Journalize the necessary adjusting entries. (Ignore income tax effects.)

2. Journalize the necessary closing entries.

3. Prepare a post-closing trial balance.

4. Can a company pay dividends in a year in which it has a net loss? Can a company owe income taxes in a year in which it has a net loss?